Harrisburg business leaders undeterred by city's continued fiscal issues

By Jason Scott,
October 12, 2012 at 11:00 AM
- Last modified: October 12, 2012 at 11:40 AM

Despite all of the capital city’s fiscal challenges and lingering questions about recovery plans items and timelines for real progress, Harrisburg business leaders haven’t wavered in their optimism for long-term development opportunities.

"You can always do better," said H. Ralph Vartan, CEO of Susquehanna Township-based Vartan Group Inc., one of the largest private landholders in the city.

Vartan recently completed the 1500 Project, a mixed-use condominium building at North Sixth and Reily streets, adjacent to the site of a future federal courthouse.

He was one of several business leaders on hand this morning for the Harrisburg Regional Chamber and Capital Region Economic Development Corp.'s State of the City breakfast at Hilton Harrisburg.

The developer said he is absolutely committed to the city and expects years of company investment in new projects.

He said that most of the city's problems are "paper problems" and that a high quality of life exists in Harrisburg.

Harrisburg has an activist business community, said David Butcher, president of city-based WCI Partners LP, a leader in Harrisburg redevelopment projects. WCI's primary focus has been buying and renovating residential properties in the Olde Uptown neighborhood, which is near the Governor's Residence.

"The best thing any government entity can do is set the table for the business community," Butcher said.

He called Mayor Linda Thompson's proposal to bring back tax abatement — a five-year ordinance is on the table — a great first step.

The city had a 10-year ordinance that expired at the end of 2010 and was the catalyst for a few recently completed development projects, including the 1500 Project and WCI's Second and State commercial office building.

Year of clarity

In her lengthy opening remarks, Thompson called 2012 a "year of clarity," a year the city bottomed out but gained some direction through a court-approved recovery plan.

Last year was a year of recovery proposals under the state's Act 47 distressed cities program and subsequent rejections by the City Council, which led to changes in the law and a new receivership process.

Harrisburg remains the only distressed municipality in Pennsylvania where its officials rejected a plan under Act 47 — which has been around for 25 years — and ended up with a fiscal overseer appointed by the Commonwealth Court.

Thompson noted several development projects, including those from the aforementioned developers, and said she is confident everyone knows where the city has been and "where we are going."

The mayor reiterated that the city is open and still doing business.

"We have a clear focus on economic development," Thompson said.

She said the city is moving beyond political conflicts and toward a real recovery. She also said the tough times of today still require "tough decisions," citing a need to increase the city's earned income tax.

Receiver William Lynch, who shared the stage with the mayor, said his primary focus remains on the future, which is "bright with potential."

His office is negotiating the sale of the city's troubled incinerator with the Lancaster County Solid Waste Management Authority. Today, it will begin negotiating with an entity known as Harrisburg First on the city's parking garages, he said.

Harrisburg First is a group led by Guggenheim Securities — a unit of privately held global financial services firm Guggenheim Partners — and includes Standard Parking and AEW.

Standard Parking operates parking facilities nationally in more than 300 cities. AEW is an experienced real estate asset manager with parking assets in its portfolio.

Lynch said he remains optimistic that a consensual solution will be reached with all parties, including creditors. If not, he is prepared to look at bankruptcy protection, he said. The city has more than $330 million of incinerator debt, plus recurring annual deficits to address.

"It's nice to have that club under the table," he said.

Lynch said the city has an opportunity here and should "seize that."

"We need to get on with the future," he said.

On the city's distressed status and recovery process, he added: "This is who we are, and we have to make it work."

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Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jscott@cpbj.com. Follow him on Twitter, @JScottJournal.
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